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CAB company uses standard costing systems. The following information relates to standard costs for one...

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Accounting

CAB company uses standard costing systems. The following information relates to standard costs for one unit of product 'Zee':

Direct material 80 lb @$2 per lb

Direct labour 1.25 hours @$16 per hour

Variable overhead 30 minutes of machine time @$50 per hour

Fixed overhead 30 minutes of machine time @$40 per hour.

The overhead application rates were developed using a practical capacity of 6,000 units per year. Production is assumed to occur evenly throughout the year. During June 2021 the company produced 525 units.

The actual costs for June 2021 are as follows:

Direct material purchase 46,000 lb @$1.92 per lb

Direct material used 43,050 pounds

Total labour cost: $10,988.25 for 682.5 hours

Variable overhead incurred $13,770 for 270 hours of machine time

Fixed overhead incurred $10,600 for 270 hours of machine time

 

Required:

Calculate the followings:

a)       Material price variance  

b)      Labour efficiency variance

c)       Variable overhead spending and efficiency variances

d)      Fixed overhead budget and volume variances

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